Hi,

Below is an equation to calculate the Total Social Surplus.

What do P(s) and P(Q) each indicate? Thanks !

(1) External welfare effect Let W= Total social surplus (= gross consumption benefit - production cost) N W = P(s)ds - >C'(q;) - decompose i=1 = [[ P(s)ds - P(Q)Q]+ E[P(Q)q; -C'(q;)]+ E[P(Q)q; -C'(q,)] iel iEO = CS + IT' + 1TO * Two wedges b/w SW and profits . W- II' = CS + ITO of merging firms: CS & II 0 n' : sum of the Insiders' profits ("Insiders" : merging firms) II: sum of the Outsiders' profits ("Outsiders ": non-merging firms)